The Financial Ombudsman Service (FOS) has revealed that disagreements between consumers and businesses about what investments should make up a high, balanced, low or no risk portfolio now form a 'significant' part of its casework.
In its latest newsletter, the FOS said it is seeing a "small but steady stream" of investment complaints involving pensions and portfolio management.
It has provided six case studies - plus the verdicts reached - highlighting the types of cases it is currently seeing...
Consumer close to retirement advised to put savings in an investment bond
To uphold or not to uphold: Six FOS investment case studies
Mr H went to his bank to pay some bills when, noticing he had £100,000 in a high-interest savings account, a cashier told him to see one of the bank's advisers, who would make sure his money 'worked harder' for him.
Although he insisted he wanted his money 'kept safe' and aimed to retire 'within the next year or so', he was advised to put the money into an investment bond.
Two years later, at the age of 64, he contacted the bank to withdraw the money, only to find out it was now worth less than £100,000.
The amount invested in the bond was virtually all his savings and he had previously only ever kept his money in bank and building society savings accounts.
Even though it accepted the bank's argument that the bond 'did not present a particularly high level of risk', the FOS upheld the complaint that Mr H had lost out because of poor advice, as the product still carried some risk of capital loss and because it was inappropriate to place all his capital in a single investment.
The FOS told the bank to pay Mr H the difference between the amount he had invested in the bond and the amount he eventually got back and also to pay him the amount of interest he would have received if he had left the money in his savings account.
Consumer's executor complains that consumer was mis-sold a five-year bond
Mrs N, the executor for her late uncle, Mr D, found he had a five-year £50,000 bond which had matured shortly before his death, paying him the same amount of capital he had invested, together with £139 in interest.
She complained to the provider that this was not a suitable product as the uncle was already 'frail' when he invested in the bond.
However, the provider argued Mr D had sought advice and was ‘fully apprised of the nature of the recommended investment'.
The FOS said it was clear from the ‘fact find' completed when Mr D first contacted the provider that he had stressed he was an experienced investor and also pointed out he had other savings and investments to lean back on.
Verdict: Not upheld
Consumer says he was misled about nature of an investment he made on an ‘non-advised' basis
Mr A invested £8,000 in a five-year investment plan that was advertised in his daily newspaper, offering ‘extra income', having been sent a product brochure and key features document.
Five years later, when the plan matured, he complained to the product provider as the value of his investment had fallen significantly and he claimed he would never have invested if he had known this might happen.
The FOS said the key features document had included a clear description of the plan, with the risks set out prominently and projected returns including a scenario where the stock market had fallen.
It did not uphold the complaint, saying the provider had not misinformed or misled him, also pointing out the introductory letter had told him to seek investment advice if he had any doubts.
Verdict: Not upheld
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